The Age of Lotus

This year’s budget will be the formal handover of the economy from A.M.A. Muhith (centre) to Lotus Kamal (right). File photo

With most offices and agencies heading into the always prolonged, and infinitely precious holidays on occasion of Eid ul Fitr, few government departments have been harder at work than those under the Ministry of Finance throughout the month of May. That is because not long after government offices reopen after the Eid holidays on June 9, Finance Minister A.H.M. Mustafa Kamal, or Lotus Kamal as he is more commonly known, is slated to deliver the government’s proposed budget for the 2019-20 fiscal, on June 13. With that in mind, the aim was set to go into the holidays with all the work on the budget already complete, to avoid any slip-ups in the period when they’re back, and any surprises.

According to Finance Ministry sources, they did finally manage to do it in the last week or so, allowing Prime Minister Sheikh Hasina to leave on a 12-day trip through 3 countries (possibly 4) on May 28 with the announcement that the next budget to be placed by her government would clock in at over ‘Tk 5 lakh crore’, or Tk 5 trillion. Most sources hover around a figure of Tk 525,000 crore, an almost 13 percent increase. To that end, it would seem to continue in the vein of expansionary budgets that the Awami League government has followed since assuming power in 2009. The first 10 years of course bore the hallmark of the vision set forth by its finance minister from 2009-2018 across two terms in office, the venerable A.M. A. Muhith.

The next budget will be the first one under Lotus Kamal, who replaced Muhith as finance minister as AL commenced an unprecedented third consecutive term earlier this year. Any new finance minister’s first budget is always bound to be interesting, presenting the opportunity that it does for a different vision for the nation to make its mark. No doubt the public will be watching and listening keenly then on June 13, to suss out any signs that they can of this. While not possessed of the intellectual gravitas or reputational excellence of Muhith, Lotus Kamal, who made his name, as well as a fortune, in business while at the same time maintaining close ties with the AL leadership throughout. Over the years, he gained a reputation as one of the party’s largest funders. Following in the footsteps of the likes M Syeduzzaman, M Saifur Rahman, and , SAMS Kibria, Lotus Kamal may not come across as the most inspiring pick - but he is thought to understand transactional value, the world of business and through varied experiences as a sports organiser (rising to serve as president of the International Cricket Council), could provide the benefits of a well-connected man of the world.

During his years at the helm of the Planning Ministry, he tried to instil project discipline within the party structure through more professional implementation of the Annual Development Budget. His frequent clashes with Muhith signalled he was gunning for his position, especially in the latter years. Now that he has got it, all eyes will be on him to see what sort of different path he can actually forge in the days ahead. Can he really present something new for the tens of millions of fans he has by now gathered?

Any new finance minister deserves at least the patient hearing of his first budget speech before being judged, and for that we must wait till the June 13th. Truth be told, the first six months of Finance Minister Lotus Kamal have not exactly inspired confidence, nor served much warning of new thinking and innovative solutions about to break ground under his leadership. Take, for example, the continued wrangle over PPP which, believe it or not, was originally a Muhith contribution from 2009.

The government has planned to take 30 per cent Annual Development Programme (ADP) projects under the Public-Private Partnerships in the next fiscal to boost PPP growth for infrastructural development.

Sources said various moves are being made to increase domestic and foreign investment, reports UNB.

As part of the move, the government wants to implement rules for national priority projects, a series of training programmes for PPP, implementation of decisions taken in board of governors meetings, special project review meeting for executive board members, budget transfer in PPP Technical Assistance Fund and special incentive for PPP projects.

Some 78 projects have been recommended for inclusion in the ADP to be implemented under the PPP for 2019-20 fiscal. The number is 37 in the revised ADP of the current fiscal.

An inter-ministerial programming committee meeting on April 18-25 advised undertaking more projects. The same thing was stated in the ADP guidelines and Prime Minister’s Office letter. Later, some 61 projects for PPP were found from various sectors while two of them were already approved.

From the PPP Authority, some 47 approved PPP projects were found. Of them, 30 had already been included in the list that came from various sectors, the officials said. The projects include the construction of Dhaka-Chattogram Expressway, upgrading Dhaka-Mymensingh Highway, upgrading Dhaka circular root (second part), construction of satellite city in Mirpur-9 and upgrading Dhaka bypass road.

The PMO wrote to the National Board of Revenue in November last year to provide special incentives to PPP projects. The government has planned to take 30 per cent Annual Development Programme (ADP) projects under the Public-Private Partnership in the next fiscal to boost PPP growth for infrastructural development.

Sources said various moves are being made to increase domestic and foreign investment, reports UNB.

As part of the move, the government wants to implement rules for national priority projects, a series of training programmes for PPP, implementation of decisions taken in board of governors meetings, special project review meeting for executive board members, budget transfer in PPP Technical Assistance Fund and special incentive for PPP projects.

Some 78 projects have been recommended for inclusion in the ADP to be implemented under the PPP for 2019-20 fiscal. The number is 37 in the revised ADP of the current fiscal.

An inter-ministerial programming committee meeting on April 18-25 advised undertaking more projects. The same thing was stated in the ADP guidelines and Prime Minister’s Office letter. Later, some 61 projects for PPP were found from various sectors while two of them were already approved.

From the PPP Authority, some 47 approved PPP projects were found. Of them, 30 had already been included in the list that came from various sectors, the officials said.

The PMO wrote to the National Board of Revenue in November last year to provide special incentives to PPP projects.

Cooking the books?

The Centre for Policy Dialogue (CPD) questioned the current year’s growth estimate of 8.13 percent, used as the basis of the targeted growth figure of 8.2 percent citing incoherencies in various indicators of the economy.

The independent think tank said, growth estimate has been done based only on five months’ data of manufacturing and six months’ data on financial sector.

Agriculture crop production data was almost absent when the GDP estimate was made, it said at a media briefing at CIRDAP Auditorium today.

The organisation said, leather and leather production has been shown to have grown by 32.5 percent growth without a commensurate reflection in the export performance. “Shipment of leather and leather slumped 16 percent July-November period of the current fiscal year.”

Tax-GDP ratio stood lower in the first quarter of the current fiscal while private sector credit growth slowed down as of February 2019, it said.

The CPD found some support this time, in questioning the government’s figures on certain sectors, that are located j Sachpa bhanne. South Asian Network on Economic Modeling (SANEM), a non-profit research organisation, today termed the recent economic growth of Bangladesh as “puzzling”, saying that the GDP growth mismatched with the data and various indicators of the economy.

Claiming that export and remittance are the primary drivers for economic growth, the SANEM said the economic growth rates in recent years do not match with the fluctuations in the export and remittance flow.

It said the government data showed surge in private consumption in the last two fiscal years -- 2016-17 and 2017-18 – although export and remittance growth were in the lower state.

“Private consumption growth was not too high in the past years. Why did private consumption growth record such a sharp increase? Public consumption growth can be explained to some extent because the government is spending. Private consumption growth is a puzzle,” said SANEM Executive Director Selim Raihan at the BRAC Centre Inn in Dhaka.

SANEM, citing Bangladesh Bureau of Statistics (BBS) and other data, said private consumption growth was estimated at 11.41 per cent in fiscal year 2017-18 from 7.43 percent the previous year.

“This is a big concern that we see the high private consumption growth despite low export and remittance growth. Second concern is that we see high manufacturing growth despite low export growth and slow private investment,” said Raihan, also professor of Economics at University of Dhaka.

For development’s sake

The government has finalized a Tk2,02,721 crore annual development project (ADP) for the upcoming 2019-20 fiscal year, giving the highest allocation to the transport sector. The ADP outlay is the highest in the history of the country.

Prime Minister Sheikh Hasina approved the ADP in a meeting of National Economic Council (NEC) at the Planning Ministry in the capital. Ministers concerned and the council members were present in the program. Planning Minister MA Mannan briefed reporters after the meeting.

“New ADP allocation size has increased by 17.18% compared to Tk1,73,000crore original ADP for the current FY2018-19,” said the planning minister.

“The growth is 21.39% higher than the revised ADP of Tk1,67,000 nrore for the current fiscal year,” he said, adding that the country attained at least 7-fold rise in ADP outlay in the last 10 years.

It was only Tk 30,500 crore in 2009-10FY, informed Mannan.

Of the total outlay, the government would generate Tk1,30,921 crore from internal sources, while Tk71,800 crore would come from foreign sources, according to a document of the planning ministry.

A total number of 1,358 investment projects and 116 technical assistance projects will be funded from the ADP, it says.

The planning minister said the government gave the transport sector priority considering the rapid implementation of Padma Bridge and its rail link projects.

NEC allocated Tk52,806 crore for the transport sector, which is 26% of the total size of the ADP, while the second highest allocation is for electricity — Tk 26,017 crore.

Among the other sectors, education and religion got an allocation of Tk 21,379 crore, science, information and ICT Tk 17,541 crore, rural development Tk15,157 crore, health, population and family welfare Tk13,055 crore, agriculture Tk 7,616 crore, water resource Tk 5,653 crore and the public administration sector got Tk 5,024 crore allocation for FY2019-20.

On ministry-wise ADP allocation, local government department got the highest allocation with Tk29,777 crore, power and electricity division TK26,014 crore as second highest and road transport and highway division Tk25,163 crore as the third highest recipient.

Planning Minister MA Mannan said Prime Minister Sheikh Hasina, in the meeting, directed officials concerned to look into the projects not implemented in time and to find out the reasons behind their delayed implementation.

“Besides, she urged the officials not to acquire crop fields for implementing development projects,” he said, while briefing the reporters.

On revenue collections, the prime minister asked Finance Minister AHM Mustafa Kamal to fix disputes over long outstanding value added tax (VAT) amount between the National Board of Revenue (NBR) and other government agencies like Bangladesh Petroleum Corporation (BPC), said the minister citing Hasina.

Mannan said that PM instructed for a publication compiling all development projects implemented by all ministries in the three hill districts.

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